Guidelines for Costs Estimates under the Uniform Law

Under the Legal Profession Uniform Law, practitioners must provide a client with an estimate of the total legal costs for the work to be undertaken.

The Legal Services Council  issued guidelines and directions for costs estimates, with worked examples for three different scenarios, on 11 March 2016.

The guidelines confirm the following aspects of the disclosure obligations:-

1. The “total legal costs” includes professional fees, any uplift fee, all disbursements and GST;
2. The basis on which the costs will be calculated must be provided – arguably not only for professional fees but for disbursements and GST where appropriate including counsel’s fees;
3. A single figure estimate is required (as opposed to a range of estimates);
4. Estimates may be provided for various stages of a matter, however a single figure estimate of the total legal costs based on the circumstances and most likely outcome should be provided;
5. The work to be undertaken and to which the estimate relates should be clearly defined and understood by both the practitioner and the client;
6. It should be explained to the client that the estimate is not a fixed fee quotation, and the actual legal costs may vary from the estimate provided (the worked examples include variations of +/- 10%-15% from the estimate);
7. The examples demonstrate various stages at which updated estimates and disclosure are required during the course of a matter.

The guidelines also include directions to the each of the regulatory authorities in NSW and Victoria to inform the Council of the extent to which the guidelines are being applied in practice, and any judicial or other decisions concerning the interpretation of the requirement to provide an estimate.

A similar guideline has been issued by the Commissioner for Uniform Legal Services, with additional directions to the regulatory authorities  to report at least annually on the extent to which law practices are providing estimates “based on the appropriate exercise of professional judgment”, provide adequate disclosure and explain variables to clients, the extent to which actual legal costs vary from the estimates, what are “fair and reasonable” legal costs in particular circumstances and any modifications or exemptions from the effect of non-disclosure.

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